Business ordered to refund $85,000 in ‘lost’ SMSF monies
The Supreme Court of Western Australia has ordered a financial services business to pay over $85,000 of self-managed superannuation fund (SMSF) monies back to a client, after the company allegedly gave inappropriate and conflicted advice.
The court hearing proceedings initiated by the Financial Ombudsman Service (FOS), ordered that Utopia Financial Services Pty Ltd pay $85,756 plus interest back to the client who incurred a loss as result of the firm's advice.
The court heard that an authorised representative of Utopia allegedly gave Dr Shelley Craddock advice in November 2006, to roll her super ($59,887) out of an industry super fund, into a new SMSF, borrow money and invest in a private trust, of which the authorised representative was the corporate trustee.
The court was told the trust was then going to develop a strata development in Cottlesloe, but "as a result of the global financial crisis" there were difficulties in borrowing funds and buying "all the necessary strata units", Craddock then wanted to "exit her SMSF's investments" but was unable to do so.
The court ruling followed the FOS' investigation into the matter in 2012, and subsequent request for Utopia to pay the monies back to Craddock, something which had not occurred.
FOS had found that Utopia breached its obligation under the Corporations Act 2001 and that Craddock suffered a loss as a result of their breach.
Recommended for you
Two commentators have shared why cultural alignment can be the biggest deal breaker when it comes to advice M&A and how to ensure a successful fit.
Formal education has played a large role in enhancing the advice profession over the last decade but, with the bar now so high, two advisers debate whether it is necessary to complete additional study.
With an abundance of private market options coming to market, due diligence becomes increasingly important as advisers separate the wheat from the chaff, adviser Charlie Viola has said.
The Treasury has launched a consultation into how the $47 million special levy for the Compensation Scheme of Last Resort will be funded.
